November 12, 2026, by Jake Dye, special to the Seward Folly

The Seward City Council kicked off a series of public hearings this week on the city’s next budget, which covers 2027 and 2028. The proposed document describes a new sales tax structure and property tax cuts, amid largely status quo spending.

City Manager Kat Sorensen, during work sessions last month, said that the city is facing rising costs due to inflation across departments but also because of significant new expenses like the Seward Community Center and Seward High School’s pool. The city this year took over management of the center, using the facility formerly occupied by Seward Middle School, and is providing funding to subsidize operations of the pool.

Those costs motivate the proposal for a new seasonal sales tax model, Sorensen said. The budget proposal describes trading the city’s current 4% sales tax to a shifting rate that increases to 6% in summer months — April 1 through September 30 — before dropping to 0% in the winter. The change would only impact the city’s sales tax, leaving the Kenai Peninsula Borough’s 3% sales tax in effect year-round — a cumulative 9% tax in the summer and 3% in the winter. That proposal, if accepted, wouldn’t start until Jan. 1 of 2028.

The delayed implementation is necessary, Sorensen said, because some visitors have already begun to make their bookings and plans for next year — also to give local businesses time to prepare for the logistical hurdles.

“New, sustained revenue in the form of a seasonal sales tax lets the city fund these costs without reducing any services to city residents and increases the revenue to invest in capital infrastructure in our city, including the hospital,” she said.

Sales tax data shared by Sorensen during the presentation shows that during the winter, when sales taxes would be reduced, Seward, on average, records only around $38 million in taxable sales per year, compared to around $160 million during the summer months. In 2025, the city brought in $8.5 million in sales tax revenue; under the sales tax proposal, the city projects to bring in nearly $11 million.

That increased revenue, she said, comes largely from summer tourists, rather than Seward residents, who will see decreased costs in the winter. Sorensen said the increased revenue will also allow for a reduction in the city’s mill rate, which is the value used to determine property taxes. A proposed 1 mill decrease would mean savings of $100 for every $100,000 in taxable property value.

There was some discussion by the council as to whether a 1 mill decrease is the right path to provide tax relief to Seward residents, and a few alternatives were raised during the work sessions. Casie Warner suggested the city explore offering more targeted property tax exemptions as allowed under a new law passed this year by the Alaska Legislature. Matt Cope said he wanted to see a more equitable distribution of the tax relief.

“We want to make winter more accessible, more affordable, and a tax reduction rate on property would really only affect people who own property,” he said. “Not year-round renters, not people on lower incomes.”

Sorensen added as a possible alternative that the city forgo the mill rate reduction and instead use the increased revenue to eliminate Seward Electric Department’s administrative fee, which would mean a reduction in electric rates.

“With that we would be able to reduce rates in 2028 by either one cent in the winter or half a cent all year,” she said. “Which is a smaller impact than dropping property taxes, but it’s spread out over the entire community, to all ratepayers.”

No final decisions were made last month as to how to proceed with the revenue measures in the proposal, and the draft in its current form includes the mill rate reduction.

Sorensen and the council did not discuss increased costs that would be borne by city residents during the summer months when the sales tax would be higher.

The Kenai Peninsula Borough in 2025 considered the seasonal sales tax model but ultimately postponed amid questions about costs and benefits — while revenue is higher in the summer because of tourists, residents too can be more active and more likely to take on certain expenses in the summer months. The increased taxes also uniquely hit summer businesses like fishing guides. Supporters of the idea at the borough level promised to bring it back up for consideration, but hadn’t before this year’s election.

Seward residents indicated in a survey this summer, Sorensen said, they wanted city services either increased or maintained. They identified a seasonal sales tax as a preferred way to meet those costs.

A seasonal sales tax, as opposed to a bed tax, captures revenue across all industries and from people staying outside of Seward but still making use of the city’s resources, Sorensen said.

The proposed budget is broadly status quo, but includes the addition of two new staff positions: an IT technician to support the city’s IT director in cybersecurity and other needs, and a new maintenance and streets worker who would alternate between conducting maintenance in city facilities and assisting with response to road needs like snow and floods. The budget also provides funding for a police sergeant position, moves an administrative position to the library and adds funding for a part-time custodian at the Community Center.

The budget proposal also includes money for capital projects including technology upgrades and infrastructure repairs in city facilities, roofs for an outdoor basketball court, repairs to the restroom at Williams Park and new exterior power outlets to maintain police officers’ patrol cars, among others.

The council heard public testimony on the budget proposal on Monday, and will again on Nov. 23.

Tom Tougas, who served on the borough’s tourism industry working group that first suggested the seasonal sales tax model in 2025, said he was unconvinced that Seward needs to raise its sales tax. Seward has already exceeded its sales tax revenue projections in recent years, he said.

“When you’re paying $2 extra for gas at Essential One, 7% of that goes to the city. Nobody benefits from inflation like the city,” he said. “The number one reason for increasing tax revenues kind of goes away once you realize that, as costs go up, the city is the primary beneficiary.”

Jenn DesErmia and Mica VanBuskirk asked the council to support funding for a community and business partnership coordinator in the budget.

Final action on the budget is scheduled for Dec. 14. Sorensen said the proposed changes to the sales tax and property tax will come before the council as separate ordinances for approval.